The New Negative List of Investment

Thursday, July 5, 2007

Jakarta Post issued an editorial discussing the new investment's negative list:
It's true these sectors -- telecommunications and insurance -- became more restrictive, with foreign ownership in telecommunication companies (telcos) now restricted to 65 percent for mobile services and 49 percent for fixed network, with the insurance industry at 80 percent. The good news is however the new regulation is not retroactive so those foreign investors should rest assured their controlling ownership in those companies would not be contested.

In total, there are 11 sectors becoming more restrictive

While it's true some sectors would become more restrictive for foreign investors, more and more sectors are widened further to foreign ownership, including oil and gas exploration, the pharmaceutical industry and construction services. Some sectors, previously partially or wholly closed, are now opened to foreign investment, including health and education -- two of the most important sectors for the well being of the people. And we welcome this.

Drinking water is opened for investment with a condition that the maximum capital ownership of the foreign investor is 95%. To me this gives an impression that the Govt would like boost foreign investment in the infrastructure sectors. From one point of view, this is good. From another point of view, privatizing a Universal Service Obligation (USO) must be conducted with a great care, for the reasons I have explained here.

See the negative list yourself here (only in Bahasa for now, sorry).